1.   Any transaction regardless of its form, that creates a security interest in personal property or fixtures by contract (not real property)

      2.   Agricultural liens – services provided to a farmer such as crop dusting the statute gives you a lien

3.   Sales of accounts receivable, chattel paper, negotiable instruments, and payment intangibles

1.    Who/What are the parties

2.    What is the security interest in

3.    What type of security interest is it

4.    Who has priority

5.    Was there a default

6.    Type of default

7.    Debtor’s/Secured Party’s remedies

8.    Creditor’s remedies

9.    Is there a disposition

1.   Goods include: all things that are moveable at the time the security interest attaches

(1) Consumer goods

(2) Inventory

(3) Farm products

(4) Equipment

2. Fixtures

3. Accession

4. Commingled Goods

These are certain intangibles such as contractual obligations to hold goods or pay money that are commonly reduced to tangible or written form – by transferring the writing you transfer the underlying right

Instruments

Documents

Chattel Paper

Many intangibles, such as monetary obligations or literary rights, while possibly evidenced by writings, are treated as intangibles

Accounts

Deposit Account

General Intangibles

Payment Intangible

Includes: Certificated and uncertificated securities, securities accounts and entitlements, and commodity contracts and accounts

Proceeds include:

a.   Whatever is received upon the sale, lease or other disposition of collateral

b.   Whatever is collected on account of the collateral (if the A/R is the collateral, and when the person pays, then that is the proceeds)

c.   To the extent of the value of collateral, claims arising out of the loss of, or defects in or damage to the collateral (including insurance)

Two Types: cash and non-cash (e.g. A/R)

An agreement that creates a security interest in certain collateral (it is the contract)

The security agreement/interest must be in writing and:

a. Contain a granting clause – must expressly grant a security interest     

b. Must generally contain a description of the collateral

c. Must be authenticated by the debtor

Authentication means: either signing a written document or executing or otherwise adopting a symbol, password, or other encryption (electronic transactions)

If a written security agreement is absent: the secured party must have possession of the collateral for it to be effective (oral agreement)

Where the secured party has possession, all that is needed is: an agreement which can be oral that the secured party has the security interest

The security interest attaches when:

1-The secured party gives value (giving a loan)

2-The debtor has rights in the collateral (usually by owning it)

3-When the debtor has authenticated a security agreement that sufficiently describes the collateral (but remember the pledge rule if oral)

_{- A collateral description is sufficient if it describes the collateral by UCC type; ‘all consumer goods’ description insufficient}

_{- A super-generic description is not sufficient}

_{- A security agreement may provide for an interest in after-acquired collateral but must be specific}

_{- Two types of collateral that are always after-acquired: inventory and accounts receivable}

_{- A security agreement cannot provide that it covers after acquired consumer goods unless the debtor acquires rights in the goods within 10 days of the secured party giving value}

_{- A security agreement may also provide that collateral secures future advances}

A security interest in goods is a purchase-money security interest (PMSI) if it pertains to goods that are purchase-money collateral

- Purchase-money collateral refers to goods securing a purchase money obligation that a debtor incurs to purchase the goods

- A debtor incurs a purchase-money obligation if the obligation is incurred:

a. As all or part of the price of the collateral

b. For value given to enable the debtor to purchase the collateral if the value is in fact so used

A security interest is perfected if it has attached and certain other requirements for perfection are met

- Filing

- Possesion: negotiable documents, goods, instruments, money, or tangible chattel paper; A security interest in money is perfected only: by possession

- Control: investment securities, letter of credit rights, deposit accounts, electronic chattel paper

Generally:

1-A PMSI in consumer goods

2-The sale of a payment intangible

3-The sale of a promissory note

_{4-A security interest created by assigning a healthcare insurance receivable to the health care provider}

Automatic Permanent Perfection

Automatic Temporary Perfection (20 days)

Financing Statement must include 3 basic things:

1-The name of the debtor

2-The name of the secured party

3-A description of the collateral covered by the financing statement

- Must be authorized by the debtor but is implicitly authorized when there is a security agreement whether it says so or not

- Fixture Filings

- Procedurally strictly followed or ineffective

- May be filed prior to attachment for priority

- Errors ok unless seriously misleading

- Change of debtor's name, address, location/sale of collateral

- Efective 5 years after filing; renewal 6 months prior to termination

General Rule: first-in-time is first-in-right

- first to attach

- perfected over unperfected

- if both perfected, first to file or perfection

- lien creditors: judgment or possessory

PMSI Super Priority Rule: second-in-time is first-in-right

- Inventory Exception (additional steps needed)

- Special rule for PMSI and lien creditors

Accessions

Commingled Goods

A security interest survives a sale of the collateral unless the secured party consents to the sale or unless an exception applies

Exceptions

1. The buyer is a buyer in the ordinary course of business – look at the business of the seller – this generally protects the consumer

2. The sale qualifies as a consumer to consumer sale – a.k.a. the Garage Sale Exception

3. A buyer of chattel paper has priority over any other security interest in the chattel paper if he gives new value and takes possession in good faith, in the ordinary course of business, and without knowing that the purchase violates the rights of the secured party

Default of Physical Collateral

Default of Intangible Collateral

Debtor’s Right to Redeem

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